Gwynne Dyer: Unpacking U.S. energy myths

Which of the following statements is true? The United States now has a 100-year supply of natural gas, thanks to the miracle of shale gas. By 2017 it will once again be the world’s biggest oil producer. By 2035 it will be entirely “energy-independent”, and free in particular from its reliance on Middle Eastern oil.

Unless you’ve been dead for the past couple of years, you’ve been hearing lots of enthusiastic forecasts like this, but not one of them is true. They are generally accompanied by sweeping predictions about geopolitics that are equally misleading, at least insofar as they depend on assumptions about cheap and plentiful supplies of shale gas and other forms of “unconventional” oil and gas.

For example, we are assured that the United States, no longer dependent on Arab oil, will break its habit of intervening militarily in the Middle East, since what happens there will no longer matter to Washington. But this new era of cheap and plentiful energy from fossil fuels will also result, alas, in sky-high greenhouse gas emissions and runaway global warming.

These statements are also untrue, at least in the formulation given above, since they are based on quite mistaken assumptions.

The original error, on which most of the others are based, is the belief that “fracking”—hydraulic fracturing of underground formations of shale rock to release the gas trapped within them—has fundamentally transformed the energy situation of the United States. Huge amounts are being invested in the newer shale plays like the Eagle Ford formation in Texas and the Marcellus in Pennsylvania, but the numbers just don’t add up.

Production of shale gas has soared in the United States (still the home to most shale plays) in the past 10 years, but it is only compensating for the decline in conventional gas production in the same period. Moreover, while the operators’ calculations assume a 40-year productive lifetime for the average shale gas well, the real number is turning out to be around five to seven years.

That means that in the older shale plays they have to drill like crazy just to maintain current production—and since drilling is very expensive, they aren’t making a profit. As Exxon CEO Rex Tillerson told a private meeting four months ago: “We’re making no money. It’s all in the red.”

They are hoping to make a profit, of course, once the gas price recovers from the ridiculous level of $2 per million BTU that it fell to in 2009, when a great many people believed this really was a miracle. Four dollars per million BTU would do it for most operators, and even the highest-cost ones would be making a profit at $7. But it’s clear that shale gas is no miracle that will provide ultra-cheap fossil fuel for the next 100 years.

In that case, the prediction that the United States will be the world’s biggest oil producer by 2017 is nonsense. Even on an ultra-optimistic estimate of how much “unconventional oil” it can eventually get out of the shale formations, it will still be importing a large proportion of its oil in 2035.

At the peak of U.S. oil production, in 1970, it produced 10.6 million barrels per day. It currently produces 9.6 million barrels per day, and consumes 21 million bpd. It is preposterous to argue that it can close that gap by coming up with another 11 million bpd of unconventional oil at an economically viable price.

“Energy independence”, if it ever comes to the United States, is likelier to come from a combination of conservation measures (like President Obama’s regulation that will almost double the fuel efficiency of American-built cars by 2016) and an increased emphasis on renewables (wind, solar, et cetera.).

And the whole Middle Eastern business is a red herring, because the United States does not depend heavily on Middle Eastern oil. Most U.S. oil imports come from the Western hemisphere (Canada, Mexico, Venezuela) or from Africa (Nigeria, Algeria, Angola). Only 15 percent of its oil comes from Saudi Arabia, Iraq, and Kuwait, and virtually none from anywhere else in the Gulf. Whatever America’s various wars in the region may have been about, they were not about “security of oil supply”.

Which leaves the business about shale gas and oil pushing the world’s greenhouse gas emissions over the top. They can’t do that, because we are already over the top. We need only continue on our present course, without any growth in “unconventional” oil and gas production, and we will be irrevocably committed to 2 degrees C of warming within 10 years. Within 25 years we will be committed to +4 degrees C.

So why are we fed a daily diet of misinformation about energy in general, and shale gas in particular? Because a lot of people have something to sell.

Gwynne Dyer is an independent journalist whose articles are published in 45 countries.

Comments

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13 Comments

MarkFornataro

Jan 2, 2013 at 8:42pm

Very ironic for Gwynne Dyer of all people to say "So why are we fed a daily diet of misinformation about energy in general... Because a lot of people have something to sell." I agree with the statement but coming from Mr Dyer who pushes a lot of misinformation by claiming nuclear energy is the safe and viable way to go, it seems profoundly hypocritical.

John Matlock

Jan 3, 2013 at 9:26am

Some dozen years ago there was a big shale oil development project out in the American West. It was going to make us energy independent. At great expense they produced a few tank cars of crude oil. They shipped it to a refinery. A while later the refinery called back. "Don't ship us any more of that stuff, it won't go through our refinery (too heavy I presume)." It would take the construction of a new refinery, and due to the greenie people and the NIMBY (Not In My Back Yard) people there hasn't been a refinery constructed in America for about fifty years. Yes, shale oil is there, but don't bet the family fortune on it. The project has been long since abandoned. Energy independence is the politicians new "be happy, be happy, vote for me" phrase.

anonymous

Jan 3, 2013 at 10:17am

Let's face it - there is no way to produce electricity that is completely environmentally friendly, clean and without some kind of drawback somewhere.

That being said, nuclear fission still gets my vote (until we can build space elevators and have solar panels in orbit that feed us constant electricity). You can power a city of 60,000 homes for a year on one rail car of uranium ore. There are issues with handling the resultant radioactivity, but they are comparatively minor (and almost always local) compared to the effects of green house gas emissions.

There would be issues with converting all our gas-burning cars to electric cars. It'd be expensive, and we need improvements in how we store that electricity (either better batteries or better fuel cells or something).

Is nuclear 100% safe? No. But then, nothing is. We can either give up producing electricity and do away with computers, tv, radio, movies, mass market magazines & books...or we can accept that there are going to be costs associated with living in a technological society and decide intelligently which costs we want to accept.

When you start looking at it that way, and when you factor all costs into the calculation (including costs for damage to the environment, because that will come back to haunt us sooner or later), then nuclear is a viable alternative that is technologically viable NOW, not some years in the future after some unspecified and wished-for breakthroughs.

anonymous

Jan 3, 2013 at 11:46am

The David Suzuki Foundation states, in part, the following on nuclear power:

"Nuclear power is experiencing a revival due to growing concerns about climate change. The nuclear industry has reinvented itself as an environmentally friendly option, producing electricity without the air pollution and greenhouse gas emissions of coal, oil or gas.But a closer look reveals nuclear power is neither an environmentally or financially viable option. Nuclear power creates radioactive waste for which there is no accepted method of safely managing or storing. It is also prohibitively expensive. The last plant constructed in Ontario, Darlington, was budgeted at $3.4 billion but ended up costing $15 billion when it was finally completed in the mid-1980s."the whole post can be read at:http://www.davidsuzuki.org/issues/climate-change/science/energy/nuclear-...My feeling is that proponents of nuclear energy are being intellectually lazy in not recognizing the great strides toward producing lots of truly clean energy that Germany- with its energy-intensive economy- is making. If Germany can do it, so can others.

Adamant

Jan 3, 2013 at 6:58pm

@ John MatlockJust to correct you a little bit John your badly misinformed about refineries. The only part of your statement that is correct is that there hasn't been a new refinery built in North America for fifty years. You put that down to Nimbyism.The truth is that there is a huge glut of oil available globally. That excess in oil faces a bottleneck in the production cycle and that bottleneck is refining capacity. That bottleneck is what keeps the prices high. That bottleneck is and has been quite deliberate and it has been engineered by your pals in big oil.When the Irvings wanted to expand the refinery in St. John the project was killed off. When Imperial wanted to expand their capacity in Sarnia, again the project was killed off. The big money isn't in pumping oil, it's in refining it. And the big players aren't in a sharing mood.Don't believe me? Google how many refineries in Texas and Louisiana are sitting idle. Google how many refineries globally have had fires and explosions and are now "too expensive to repair". Consumers are being manipulated by "big Oil" and this isn't going to stop anytime soon.But don't make the mistake of blaming Nimbyism for the problem.

dru

Jan 4, 2013 at 5:18am

Of course it's all nonsense! Energy independent? Having 100 years' worth of conventional gas (or shale), which diminishes your reliance on imported oil, is merely a temporary respite.It's a non-renewable, finite resource. So whether it's 2 decades or a century's worth you've got--you'd eventually have to outsource your energy needs anyway.I think the definition of "energy independent" should shift from simply having your own oil and gas reserves--to something much more stable and reliable,such as solar,wind,hydro-electric energies etc.

SCISSORPAWS

Jan 5, 2013 at 6:29am

Instead of unconventional oil/gas extraction the US should be investing in a national program of hydrogen from electrolysis from electricity generated by solar cookers in hot deserts of which they have a few. Possibly working with Mexico, Baja and all that. Minimal environmental impact - though not zero - and no greenhouse gas emissions. More than 100 years it would be infinite once up and running. I can't imagine a better investment nor better present to hand down to the generations. It would be the equivalent of the Manhattan Project or putting a man on the Moon. The technology is well understood, the challenge would be getting efficiencies up. But it would describe a generation and possibly save the planet, the ultimate mega-project: PROJECT EARTH.

Ann

Jan 5, 2013 at 8:28pm

I hope Ms. Dyer will take the opportunity to thoroughly review the headlines on E N E N E W S . c o m to see how the children of Japan and the people of Japan are suffering after Japan's nuclear-plant meltdowns.